Dealing with the Emerging Popularity of Sham Trusts

This article considers the doctrines of sham trusts and alter egos currently causing some controversy among trust lawyers. The author analyses recent decisions of the High Court involving allegations of sham trusts and alter egos and relevant authorities from other jurisdictions and assesses the legitimacy of the concepts in the context of established trusts law. While the author accepts the existence of sham trusts, she advocates for a narrower ambit limiting their application only to ab initio shams and rejects both emerging shams and alter egos. Further, the relevant intention with which sham trusts are concerned is only that of the settlor and there should therefore be no requirement of a common sham intention as a prerequisite to finding a sham trust